Depression 101

brian schwartz questioned:


It is not the end…yet. Dark clouds of recession are certainly hovering around the financial horizon. The economic indicators point towards a downtrend in business, which means problems for real estate investors, job seekers and what have you. Gas prices have hit an all time high. It is certainly time to prepare for a rainy day.

Banks are reeling under subprime losses. Real estate seems so unreal. The U.S. Government is finally seeing red in their economic predictions. What options do individuals, investors and regular employees have in this economy? What should small businesses do to prepare for the recession? Certainly none of us can afford to take things lightly.

Survival tips for employees

Recession means the axe will fall on the employees first. What we are going to witness is an exodus of sorts. Keeping our job intact will itself be a full time job. The best advice during recession is to find ways to make yourself indispensable. You should take on some more work load which ultimately would mean savings for the company. Your job would pay for itself and would make sound financial sense. It is another matter that someone else’s job would become redundant. But that’s least of your problems. Your company’s financial situation would dictate whether you keep your job or not. It is possible to keep your job safe from recession.

Every employee should start behaving like owner of the company. Your job depends on it. Where can you cut costs? What innovations can be implemented? How to sell? All these questions need to be addressed by you. This will not only mean survival of your company but yours as well.

There are hundreds of job aspirants out there. Among these many have spent a small fortune educating them to be MBA’s, engineers and what not. A bleak economy is something they have to prepare for. Forget about huge pay packets. Look at the ground reality and grab whichever job you can get. Financial security should be your first aim. Climb the job bandwagon first, secure a job. During recession, you can’t wait for manna to fall from heaven.

Survival tips for investors in the stock market and real estate

Investors in the stock market have to be extra careful during times of recession. The economic indicators will bring down the market and the investors along with it. That’s for sure. An investor should therefore have a serious look at his portfolio. Get rid of the junk stocks quickly, if you have already not done so. These penny stocks appreciate smartly during the excellent times. They also fall flat like a stout puppy during an economic downturn. Many millionaires have become paupers overnight due to holding on to these stocks. Stop loss if you have already lost. The economy is in terrible shape; don’t let it drag you along. Go for the blue chips. Even in recession they are likely to hold on to their price. Over a period they would give reasonable returns. You may not become a millionaire but then you never know.

Another piece of advice for investors is not to buy stocks with borrowed money. We are all optimists at heart and a ******** investor is the largest optimist of all. This sometimes forces them to borrow, in the hope that they will make a killing. A hot tip here, a slight upward movement in a certain stock or a credible rumor. All are sure signs of huge bucks for a compulsive investor. This is a recipe for disaster. Reign in your financial horses and wait for better days. Economy will rebound sooner than later.

Subprime losses are the engine which drove the economy into recession. Yucky avarice and greed on the part of Bankers and a knowing wink from policy makers has lead to this situation. It is therefore unlikely that real estate investments would pick up in the near future- if ever. It is best to cut losses and go away from the real estate market. Sale of property at prevailing rates is the only option even if it means loss.

Many of us have bought real estate as an investment. Some use them as weekend gateways. Letting out your second home is a excellent option you must consider. This will bring you a steady monthly income while you wait for the real estate to appreciate. Idle real estate is no longer viable. If you have a farm house you should explore the possibility of growing fruits and vegetables. This can fetch you a tidy income.

Survival tips for the common man

Many highly well loved books have started giving the impression that one can become rich only by investing passively. This mindset has taken root in many US citizens. Work is only passé. Taking financial risks means rewards. It is only now that millions have realized the fallacy of it all. For some it is too late. We have to get out of this apathy and disregard for hard work. In excellent economic times even the craziest thoughts seem to work. But during recession one has to tighten ones belt.

It is an age ancient saying that money saved is money earned. Save a part of your income. Even ten percent is enough. You must not touch any of it for a whimsical expenditure like a holiday or on a luxury. Your credit card is your largest enemy. You must bring your credit card liability to zero and then keep it away altogether. You must live within your means even if it hurts and pinches your lifestyle. Look at the recession on its face. Terrible economy does not mean becoming poor. It is simply a warning to get your act together.

It is a fantastic thought to start plotting for early retirement. This will force you to reckon about your economic future. Investment in pension and retirement funds will secure your future. If you get laid off, at least you can retire to your small financial nest. Retirement is not a terrible word any longer. It may even turn out to be the best part of your life.

Survival tips for businesses

The small businesses would be the toughest hit due to the worsening economy. It may sound depressing, but the truth is that many would be closed down. But one need not take it lying down. The smart guys have already started preparing for the days ahead by doing secretarial work on their own.

Modern technology is a boon for small businesses. Rather than renting out an expensive office, one can innovate and work from home. Finance and investment consultants, CPA’s, real estate agents and a host of other business can operate from home.

It is time to look at your accounts receivable. Businessmen should closely monitor their outstanding and reduce it as much as possible. If you hold stock, inventory should be minimized. Shift the cost of carrying inventory to your principal by using ‘Just in Time’ policy, which will save you from investing in dead inventory.

Have another look at your fees. Can you become more competitive? Instead of charging $100 can you get by with $75? Customers are looking for a bargain and reducing your professional fees will make them pleased. Consider this to be one of your effective marketing tools during times of recession.

Recession is a huge economic bully. It can make you do things which you would not otherwise consider. At the same time it is not necessary to surrender and succumb to it. Taking measured, well thought out steps to counter the threat is the only prudent way out. It is all a question of managing your finances.

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